​An architect who provided professional services to her friends, free of charge and without a contract, nevertheless owed a duty of care to exercise reasonable care and skill and was therefore legally responsible for her negligence.  Although it is an extreme example, this case nevertheless serves as an important reminder that professionals should think carefully before they offer gratuitous services to friends: Basia Lejonvarn v (1) Peter Burgess (2) Lynn Burgess [2017] EWCA Civ 254.

Background

Mr and Mrs Burgess (the Claimants) and Mrs Lejonvarn (the Defendant) were former neighbours and had also been good friends for some years. Mr and Mrs Burgess decided to carry out an extensive landscaping project in their garden (the Garden Project). 

The Burgesses instead asked for Mrs Lejonvarn’s help because she was an American qualified architect (although not a registered architect in the UK), and had just set up her own practice.  Mrs Lejonvarn had also been involved in work for Mr Burgess’ company during her two previous jobs in architecture firms.

Mrs Lejonvarn agreed to help and secured a contractor to carry out the earthworks and hard landscaping.  She intended to subsequently provide design services in respect of the “soft” elements of the Garden Project (for example, planting and lighting) for which she would charge a fee.  However, the Garden Project never got that far.  Mrs Lejonvarn had no prior experience of managing major landscaping projects and was unable to implement the Burgesses’ dream design. The Burgesses became increasingly unhappy about the quality and progress of the work, costs overran significantly and the parties’ relationship eventually became so acrimonious that Mrs Lejonvarn was replaced by a different landscaper.

The Burgesses claimed that most of the work done while Mrs Lejonvarn was involved in the Garden Project was defective and that she was legally responsible for it. They claimed damages of approximately GBP 260,000 in both contract and tort on the basis that Mrs Lejonvarn had assumed responsibility for the provision of professional services while she was acting as an architect and a project manager.

Following a trial of the preliminary issues, the court found that there was no contract but Mrs Lejonvarn did owe the Burgesses a duty of care in tort.  Mrs Lejonvan appealed.

Duty of care for pure economic loss

This is a case in which the losses claimed were pure economic losses. 

The first instance court applied the “assumption of responsibility” test.  Under this test,¹ a duty of care arises where a party with a special skill applies it for the assistance of another and, in doing so, assumes or undertakes a responsibility to that party.

The first instance court held that a duty of care had arisen under this test because Mrs Lejonvarn had voluntarily tendered professional services in circumstances where she knew the Burgesses would rely on the proper performance of those services.  She had also expressed confidence in her own ability to manage the Garden Project and the Burgesses had no reason to disbelieve that she had such expertise and experience.  Although the services were being provided gratuitously, they were still professional services which were being provided “in a professional context and on a professional footing”.  They were also being provided in the expectation that Mrs Lejonvarn would be paid for the second phase of the work.

Defendant tries to argue for a three-fold test

On appeal, Mrs Lejonvarn contended that the first instance judge had erred in applying the test of assumption of responsibility. Her argument was that, in order for there to be an assumption of responsibility, there must be a contractual framework around it which defines the services being provided.  As the first instance court had found that there was no contract between Mrs Lejonvarn and the Burgesses, the assumption of responsibility test was therefore inappropriate. Instead, Mrs Lejonvarn said that the court should have applied the three-fold test set out in Caparo Industries Plc v Dickman [1990] 2 WLR 358 in order to determine whether she owed a duty of care to the Burgesses.  The three-fold test asks whether:

• the loss was reasonably foreseeable;

• there was a sufficient relationship of proximity between the parties; and

• in all the circumstances, is it fair, just and reasonable to impose a duty of care?

Mrs Lejonvarn’s motivation for arguing that the court should apply the three-fold test was that the court would then have to consider each question separately. Mrs Lejonvarn submitted that the test would fail on the third question because it was not fair, just and reasonable in all the circumstances to impose a duty of care.

Assumption of responsibility test is correct

The Court of Appeal held that the first instance court had applied the correct test.  In doing so, it cited the House of Lords’ decision in Commissioners of Customs and Excise v Barclays Bank plc [2006] UKHL 28 which makes it clear that the assumption of responsibility test is appropriate in cases involving a relationship akin to a contractual relationship.  While the first instance court had agreed with Mrs Lejonvarn that no contract existed, it had nevertheless found that the parties’ relationship was akin to a contractual one. The services were being provided in a professional context, Mrs Lejonvarn had described the Burgesses as being her clients and the Garden Project was important to the growth of her new business.

The Court of Appeal also emphasised that, as noted by the House of Lords in Barclays Bank, the assumption of responsibility test effectively subsumes all aspects of the three-fold approach because “such considerations will have been taken into account in determining whether there has been an assumption of responsibility”.  Any separate enquiry into whether it was fair, just and reasonable to impose liability was therefore unnecessary.

Scope of the duty

The Court of Appeal also clarified three important points about the scope of duty.

The distinction between duties in contract and in tort

On appeal, Mrs Lejonvarn contended that the duty found by the first instance court involved a positive obligation to act in a specific manner in the future and that this was the law of contract, not of tort.  The Court of Appeal recognised the importance of the distinction between undertaking positive obligations (which it agreed was “the realm of contract”) and the imposition of a negative duty, for example to avoid doing something or avoid doing it badly (“the realm of the tort of negligence”).  However, it emphasised that, unlike a contractual duty, the tortious duty was not a duty to provide the services; the duty related to how those services were carried out.  Therefore, Mrs Lejonvarn did not have to provide any services to the Burgesses, but to the extent that she did so, she owed a duty to exercise reasonable skill and care in the provision of those services.

Fact-specific circumstances

The Court of Appeal also acknowledged that the first instance decision had been a trial of preliminary issues, and not a full trial of all the issues in dispute.  On this basis, it emphasised that the precise nature and extent of the duty of care owed could only be defined following a full consideration of the specific facts.

The distinction between professional consultants and builders

Mrs Lejonvarn also argued on appeal that it was anomalous for her to owe a duty of care for the Garden Project when the builders who actually carried out the work did not (on the basis of the generally accepted position that while builders may be liable for defective work under a contract, they are generally not liable to third parties for pure economic loss in tort).

The Court of Appeal accepted that this was a relevant consideration, as was the fact that the Burgesses would have a contractual claim against the builders for defects in the work carried out.  However, the Court of Appeal emphasised that there was a distinction between a builder and a professional, which Mrs Lejonvarn held herself out to be.  It cited the judgment given by Lord Justice Jackson in Robinson v PE Jones (Contractors) Ltd [2012] QB 44: “it is perhaps understandable that professional persons are taken to assume responsibility for economic loss to their clients … They expect their clients and possible others to act in reliance upon their work product, often with financial or other economic consequences”.  The Court of Appeal found in this case that both parties had recognised that, in order for the Garden Project to be successful, Mrs Lejonvarn’s professional services would be required.  These were not services that could be provided by the builders.

Comment

While this case is a salutary reminder of the potential pitfalls of gratuitous advice, the Court of Appeal’s judgment should not cause professionals to hang up the phone every time their friends ring and ask for advice.

As the first instance court was careful to emphasise, this was an unusual case.  It was a significant project and the services were being provided over a relatively lengthy period of time.  This was not a piece of brief ad hoc advice given in a social context.

Footnote:

1. Hedley Byrne and Co Ltd v Heller and Partners [1964] AC 465, and subsequently developed in Henderson v Merrett Syndicates Ltd [1995] 2 AC 145.